Following a week of market volatility and investor rotation, CNBC Pro’s analysis reveals key stocks are hitting overbought or oversold territory. Health insurer Humana leads the pack of overbought stocks after a significant rally, alongside other healthcare giants like CVS and Cardinal Health. Conversely, Meta Platforms, Autodesk, and Adobe are showing signs of being oversold after recent declines.
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Following a week of market volatility, several stocks are showing signs of being either overbought or oversold, according to CNBC Pro's analysis using the 14-day relative strength index (RSI).
Overbought Stocks:
Stocks with an RSI above 70 are considered overbought, potentially indicating a future downturn. This week, healthcare stocks dominated the overbought list:
- Humana (HUM): The health insurer has more than doubled since late March and led the S&P 500 list of overbought stocks.
- CVS Health (CVS): Up 45% in the same period as Humana.
- Cardinal Health (CAH): Has seen a more than 20% increase since mid-May.
The healthcare sector has consistently outperformed the S&P 500, especially on days when the benchmark index declines.
Other notable overbought stocks include:
- KLA Corporation (KLAC): The semiconductor equipment maker surged nearly 30% this week, with a significant jump on Thursday, driven by strong demand for chips highlighted in Oracle's earnings report.
- J.M. Smucker Company (SJM): The maker of Jif peanut butter and Cafe Bustelo coffee jumped 11% after posting solid earnings. Bank of America has a price target of $132, suggesting a 14% potential upside.
Oversold Stocks:
Stocks with an RSI below 30 are considered oversold, suggesting a potential rebound. Fewer stocks appeared on this list after the recent market strength:
- Meta Platforms (META): The parent company of Instagram and Facebook fell 5% last week and is down 11% in June.
- Autodesk (ADSK): Experienced a 14% drop over the week.
- Adobe (ADBE): Tumbled 6% on Friday following the departure of its CFO and a forecast for more modest annual recurring revenue growth.
The broader market experienced choppiness, with investors rotating out of chip stocks amid geopolitical developments and reacting to the SpaceX IPO, yet the S&P 500 managed to end the week higher for the 10th time in 11 weeks.
